G Strachan: Western Cape Prov Budget 2009/10

24 February 2009

Speaker
Premier
Leader of the opposition
Members of the Provincial Legislature
Esteemed representatives of labour, business and civil society
Director-General and Heads of Departments
Honoured guests

Molweni Nonke. Goeie môre almal.

Speaker, in the State of the Province Address, our premier highlighted some
of the many achievements of this African National Congress (ANC)-led government
since 2004, a reflection of our commitment and decisiveness to doing the right
thing. But the premier did more than this, she spoke of the many difficulties
and problems that remain. Of what has been done and what remains to be done.
Lynne Brown presented a vision of hope and progress and a future in which, if
we work together, much more can be achieved. The premier spoke of good and
transparent governance and appealed to all the citizens of the province to
become activists for change and development. It is into this framework,
outlined by the premier, that I present the 2009 Budget to this House.

Government is about constantly improving the extent and quality of social
and economic services. This provincial government has focused substantial
resources on extending and improving the quality of our education and health
systems and the expansion of the social security net. We have invested
massively in infrastructure and services that raise the long-term growth
potential of the economy. We have focused on agrarian reform, food security and
services to rural citizens. We have emphasised policies and programmes that
will contribute to our country's commitment and efforts to deal with the
environmental crisis and adapt to a changing global climate. Wherever possible
we have used labour-intensive methods of delivering infrastructure and services
and done much to support small enterprises, black economic empowerment, women,
youth and the disabled. We say without fear of contradiction that much has been
done. Much more can and must be done. We are confident that working together
much more will be done.

The points of departure for this provincial government are not reckless
pre-election expenditure and empty promises. Neither do we make claim to easy
victories.

Instead, we are guided by the principles which framed the national budget
tabled by the National Minister of Finance, Trevor Manuel. At the core of this
Budget is our conviction that to push back the frontiers of poverty – a
national imperative that calls to all South Africans – we have to navigate the
current economic crisis with a pro-poor outlook. It is in society's interests
to narrow the gap between rich and poor and to work together to make it
happen.

The economic outlook
We all know the environment in which we work is not one of our own
choosing.

External factors play a massive part and must be considered even at this the
second level of government. The global economic crisis, described by Minister
Manuel as a storm, has hit us and all its effects are yet to be felt. The
national Budget and recently published economic indicators have starkly
highlighted our vulnerability to global market conditions.

Partly because of better banking regulation, South Africa is less, but by no
means unaffected. The negative effects of the overall economic downturn have
been primarily felt through falling commodity prices with adverse affects on
mining and employment, a reduction in household disposable income and domestic
demand, decreases in exports and ongoing currency volatility. We are facing
difficult times and have already witnessed job losses and company closures in
this province.

This is especially difficult because in a global recession whose depth and
duration remains uncertain and in which general uncertainty, asset devaluation
and loss of confidence are factors, government revenue growth has slowed faster
and more substantially than anticipated.

The economic forecast for global growth in 2009 has been revised downwards
to just half a percent. In South Africa, economic growth is projected to slow
down from three percent to 1,2 percent in 2009. Just as our national economy
will be affected, the economic outlook for the province is negatively affected
by the global financial meltdown. In addition, the economic outlook of our
international markets is less favourable for Western Cape exports. As a result,
the latest Bureau for Economic Research (BER) projections indicate that the
Western Cape economy will grow at an average rate of 1,7 percent in 2009, which
is about 0,5 percentage points higher than the growth projection for South
Africa for the same period.

This is a substantial downward revision from a forecast of 2,5 percent and
4,0 percent projected for the Western Cape in October 2008 for 2009 and 2010
respectively. Of great concern is the projected downturn for the manufacturing
sector, which is expected to contract by 2,1 percent in 2009. This can be
attributed mainly to lower demand for manufactured goods in the domestic market
which results from shrinking household consumption expenditure.

Recent Income and Expenditure Surveys have shown that the Western Cape is
relatively, I must stress, relatively and marginally better off than the
country as a whole if measured by per capita income and average household
incomes. But the fact that the benefits of economic growth have not been shared
equally in the province remains a major concern and means that the poor are
extremely vulnerable. Given the economic climate there is a real risk of job
shedding. Three quarters of households in the Western Cape receive the bulk of
their income from selling their labour power and this accounts for 65 percent
of total household income in the province.

Therefore Speaker we must not underestimate the challenge we are facing.
Under the leadership of the premier, the provincial government is liaising with
the Presidential task team which has been established to deal with the impact
of the global crisis. It includes business, labour and government. In the
province the premier has led discussions with labour, business and
representatives of civil society. High level summits with the leaders and
representatives of the trade unions and business will be held shortly. The
provincial government has already intervened to marshal resources and leverage
national government support from industrial finance and other institutions for
companies in distress. The premier will announce the detail of the provincial
interventions shortly after ongoing discussions and processes with labour and
business have been completed.

Revenue
Despite a more challenging fiscal environment, in aggregate, the total
provincial revenue envelope is set to grow by R3,1 billion or 12,1 percent from
R26 billion in 2008/09 to R29,1 billion in 2009/10. Over the 2009 Medium Term
Expenditure Framework (MTEF), revenue will increase at an annual average rate
of 9,3 percent to reach R34 billion in 2011/12. On an annual basis, it is
revised upwards by R3,1 billion in 2009/10, R2,3 billion in 2010/11 and R2,5
billion in 2011/12.

At the municipal level, the restructuring of funding instruments related to
the replacement of the Regional Services Council Levy, aims to compensate
municipalities through taxes on fuel sales and the equitable share. The end
result will be more equitable treatment of rural and poorly resourced
municipalities.

Speaker I would be failing in my duty in this regard, if I did not make
reference to recent reports that the Mayoral Committee member for Finance in
the City, Alderman Ian Nielsen suggests that "cuts in the national grants
allocation to the City of Cape Town penalise the City of Cape Town for being
well run." There is a detailed explanation in the explanatory memorandum to the
2009 Division of Revenue Bill, which appears not to have been read by my
esteemed colleague at the City.

I understand Minister Manuel has responded in full. Suffice for me to state
that overall the city's transfers from the national government increases by
over R40 million year-on-year. The current Regional Service Council Replacement
grant will be subsumed by a fuel levy transfer equivalent. For those who may
ask what happened to the provincial fuel levy the answer is clear – the tax is
levied at a national level and it goes to amongst others, the City of Cape
Town. We urge our esteemed colleagues in the City to read the documentation and
resist the temptation of playing petty politics with budget allocations.

Whilst the upward revenue adjustment builds on the momentum of rising
government spending over the last couple of years, priority is given over the
2009 MTEF to allocate additional funds in areas where we have already made firm
decisions on policy that have a high and clear impact on human development and
the quality of life, as well as to protect critical areas of service delivery,
most notably in education, health, welfare services, housing, roads and rural
development.

To further enhance the impact of our expenditure plans, certain amounts
spread across the different votes have been earmarked. The practice of
earmarking national and provincial expenditure priorities has been in place for
a number of years. These have been revised in the light of tighter fiscal
conditions, to improve monitoring, to emphasise key priorities, to prevent
slippage into bells and whistles expenditure in some departments and migration
into 'soft' policy options in those departments. The earmarked allocations
therefore target early childhood development; teacher development; emergency
medical services and roads and public works - planning, design, construction
and maintenance.

The lion's share of adjustments to provincial revenue comes in the form of
the equitable share and conditional grants. Overall these allocations are
augmented by R3,6 billion or 15,5 percent from R23,2 billion in 2008/09 to R27
billion in 2009/10 and it is estimated to grow at an annual average rate of
11,6 percent to R32,2 billion in 2011/12.

Over the MTEF, baseline additions to the equitable share amount to R3,9
billion, catering for both inflation expectations and policy adjustments in
education, health and in the outer year for social development and roads. The
equitable share is budgeted to increase by R2,9 billion or 16,2 percent from
R17,9 billion in 2008/09 to R20,8 billion in 2009/10, growing over the MTEF at
an annual average rate of 12,1 percent.

Several changes have been made to the provincial fiscal framework in respect
of conditional grants for the 2009 MTEF, which account for about 20,5 percent
of the total provincial budget in 2009. The allocations to conditional grants
are revised upwards by R800 million in 2009/10, R347,6 million in 2010/11 and
by more than R1 billion in 2011/12. It is estimated to grow from R5,3 billion
in 2008/09 to R7 billion in 2011/12.

Four new grants are introduced in this Budget. The first is the Expanded
Public Works Programme (EPWP) Incentive Grant. This grant is aimed at providing
incentives for provinces and municipalities to increase spending on labour
intensive programmes.

Minister Manuel has challenged departments, provinces and municipalities 'to
exceed their targets for creating EPWP jobs'.

Secondly the Public Transport Operations Grant. This allows for improved
monitoring and control of expenditure related to bus subsidies and other
transport related issues. The initial problems relating to the payment of
Golden Arrow Bus Services appear to have been solved, but there is a lot of
work still to be done to align the service. What is now required is for The
provincial government to work much more closely with Golden Arrow, the National
Department of Transport (DoT), National Treasury and the city to ensure that
the problem does not reoccur and those loopholes in contractual and service
delivery issues are tightened.

Thirdly the Ilima/Letsema Projects Grant in Agriculture. This grant is aimed
at boosting food production and assisting previously disadvantaged farming
communities to increase food production and adopt modern farming methods.

Support for new entrants into the agricultural economy is vital as the pace
of land restitution and land reform is increased. Fourthly, and of particular
importance to this province which has been hit by flooding, a once-off
Agriculture Disaster Management Grant to deal with disasters within the
agriculture sector.

Some of the major upward revisions to existing conditional grants over the
MTEF include the Integrated Housing and Human Settlements Grant increasing by
R563,5 million over the next three years to speed up housing delivery and to
raise the value of the housing subsidy to keep pace with higher costs.
Similarly, the Infrastructure Grant to Provinces increases by R277,9 million of
which education receives R131 million, to address education specific
interventions such as school infrastructure needs, extending Grade R
infrastructure to make more classrooms available, apart from assisting with the
upgrading of schools for learners with special needs, the construction of
school libraries, laboratories, sports fields and increased school building
maintenance.

Likewise, the School Nutrition Programme increases by R220,3 million over
the MTEF to ensure that our poorest in quintile 1 to 3 primary school learners
have at least one meal each school day and to progressively expand the
nutrition programme to secondary schools. The Hospital Revitalisation Programme
increases by R86 million over the 2009 MTEF to compensate for cost effects and
to support hospitals with equipment and modernisation expenses.

The Comprehensive HIV and AIDS Grant is augmented by R103,3 million to meet
the increase in the anti-retroviral (ARV) take-up rate and the National
Tertiary Services Grant grows by R167,1 million to deal with inflation related
increases on goods and services purchased in tertiary hospitals. The
Comprehensive Agricultural Support Programme increases by R33 million to expand
the provision of agricultural support services to support food security.

Given the economic climate no major changes in own receipts have been made.
In aggregate, own receipts are projected to remain around R1,8 billion per
annum over the MTEF. As indicated by my predecessor, now the premier, in her
main Budget Speech of last year, adjustments to the motor vehicle licence fees
structures will only be considered once there is a proper understanding of how
the current licence fees structure, in comparison to our neighbouring
provinces, impact on consumer behaviour, specifically those that give rise to
cross-provincial licensing practices to avoid higher licensing fees in the
province. The research study has now been completed and provided interesting
results. Amongst others, it confirms that cross-provincial licensing migration,
especially heavy vehicles that operate predominantly within the province, is
indeed happening, and that these practices negatively impact on the provincial
fiscus, and as a consequence, the funding available for roads.

I wish to state that these licensing practices, especially by big business,
have negative economic and social implications. It is unjust because it places
a relatively higher burden on the poor, apart from the issue that it is
illegal. We acknowledge that our licence fee tariffs are the highest in the
country, but we also have some of the best and well maintained roads. The
higher fees structure unintentionally created adverse incentives within the
system that led to cross-provincial practices. We have therefore, for the third
consecutive year, taken a policy decision not to increase motor vehicle licence
fees in 2009/10 and in addition have agreed with our provincial counterparts
that they will progressively adjust their current motor vehicle licence fee
structures over the current MTEF resulting in motor vehicle licence fees to be
aligned across all Provinces over the medium term.

The implementation of the Western Cape Liquor Act will bring increased
revenue estimated to be R17,4 million in 2009/10 growing to R19,1 million in
2011/12 and without creating disincentives in the regulated liquor industry by
making the cost of licenses too high. In addition the research and negotiations
around a new tax regime for the gambling industry and specifically the
exclusivity or opportunity fee relating to the Cape Metro Casino license will
increase the revenue base in the future.

Financing allocations, mainly from the Asset Financing Reserve amount to
R529,7 million in 2009/10 and R236,4 million in 2010/11. These are for Roads,
2010 FIFA World Cup rounding-off arrangements, and the Philippi training
Stadium.

Provincial expenditure priorities
As I have said our 2009 provincial expenditure plans resonate with national and
provincial policies and take account of municipal integrated development plans.
Eight broad expenditure themes arise for Budget 2009:
* Support of decent work opportunities and skills development
* Strengthening education and improving access and nutrition
* Strengthening health services, infectious disease control and health research
and development
* Protecting and enhancing the focus on youth, women, elderly and the poor, and
the disabled
* Rounding-off preparations for the 2010 FIFA World Cup
* Improving the built environment, including housing and roads
* Extending agrarian reform and rural development and sustainability of food
security
* Strengthening financial prudence, corporate governance and inter governmental
relations (IGR).

Support of decent work opportunities and skilling
Unemployment, poverty and inequality remain our most serious challenges. Decent
work is the foundation stone of our fight against poverty and our strategy to
build sustainable livelihoods for all our people. The effects of the economic
downturn with its implications for jobs security and job losses is starting to
be felt in the South African economy. The provincial government's key sector
support interventions, enterprise development, investment promotion and
economic transformation play an important role in helping to insulate the
Western Cape economy from the full extent of the global down turn. The province
is spearheading a number of interventions in support of the creation of decent
work opportunities and skills development. The platform for doing so begins
with the alignment of skills supply with those demanded in both the public and
private sectors.

The Learning Cape Initiative, the Work and Skills for 100 000 Programme and
support for Further Education and Training (FET) Colleges collectively aim to
improve the match between skills demand and skills supply. Sectors that have
been identified for targeted skills interventions are underpinned by the
research findings of our resurgent economic development strategy – the
Micro-economic development strategy – MEDS.

The Department of the Premier is co-ordinating numerous skills development
initiatives undertaken by provincial departments and is working on achieving
greater cohesion and avoiding duplication between departments. The Expanded
Public Works Programme has achieved great success in the Western Cape,
surpassing employment and skills development targets for three consecutive
years. To build on this success, both in the Western Cape and nationally, the
National Department of Public Works presented a strategic review of the first
phase of the Expanded Public Works Programme in June 2008. This review
evaluated the key outcomes of the programme and made recommendations for the
next phase of the EPWP. The second phase will commence in 2009/10 and,
utilising the lessons learned over the last 5 years aims to increase the number
of work opportunities and the length of employment. There will be a greater
focus on women, youth and the disabled.

The key innovation of the second phase of the EPWP is the implementation of
a wage incentive. This incentive will assist the province and municipalities in
funding and further up scaling the EPWP. In 2009/10 the Department of Transport
and Public Works receives a national grant of R0,5 million towards the
implementation of phase 2. Funding for subsequent years will be based on the
creation of employment and the subsequent achievement of targets agreed to by
our Department of Transport and Public Works and the National Department of
Public Works.

Provincial departments offer a wide range of bursaries and training
opportunities both internally and externally. In the 2009/10 financial year,
R379,4 million has been set aside for this purpose, with R118,2 million and
R210,4 million of the amount to be spent by education and health alone.
Education has over 900 educators involved in completing the National
Professional Diploma in Teaching and Advanced Certificate in Education.

Strengthening education and improving access and nutrition
Education rightly forms one of the central pillars of provincial governments'
strategy.

This includes improving access, efficiency, equity and quality of learning
programmes to all five-year olds by 2010. Our vision is to provide sustainable
early childhood education that will give children a head start in literacy and
numeracy. But we must enhance the quality of learning for all learners,
increasing literacy and numeric initiatives in primary schools, developing
teachers and supporting quality management. Learners deserve quality teaching
and quality teachers.

The budget allocated to Early Childhood Development (ECD) inclusive of Grade
R, continues to show significant growth, increasing year-on-year by 37,5
percent to R313,5 million in 2009/10. Additional funding is used to enhance the
quality and increase the number of learners (6 000 additional five to six
year-olds per annum) accessing Grade R in both public ordinary schools and
community sites. The provision of teaching and learning kits and upgrading the
skills of ECD practitioners through the ECD Learnerships remain key
priorities.

The Khanya Technology in Education Project aims to address the digital
divide prevalent in poor communities. To date over 800 schools have been
provided with computer laboratories, each consisting of between 25 to 40
computers.

Approximately 664 000 learners are benefiting from using the technology on a
daily basis. An amount of R99,6 million has been allocated for 2009/10 which
will be used to maintain existing facilities computer facilities at a further
200 schools.

The introduction of Focus schools and the increase in Dinaledi schools have
seen the expansion of participation rates and improvement of pass rates in
mathematics, physical science and technology. Redress and equity will be
addressed through targeted additional support to schools in national quintiles
1 to 3 with a particular focus on infrastructure, maintenance, libraries and
resource materials. School safety will be enhanced through the use of safety
resource officers, CCTV and strengthening the community-school interface.

In monetary terms, Education receives a R1,3 billion or a 14,7 percent boost
in 2009/10 bringing the budget to R10,3 billion in 2009/10, rising to R12,3
billion in the last year of the MTEF. Early Childhood Development receives
particular attention, with the budget sharply increasing by 38,2 percent in
2009/10 to R314 million.

Furthermore, in response to food price increases, as part of a multi-pronged
strategy to address both poverty and improve the quality of learning, the
School Nutrition Programme has been substantially expanded over the next three
years.

The grant increases by 30 percent from R86,6 million in 2008/09 to R112,5
million in 2009/10 and continues to further increase in the outer years of the
2009 MTEF to R173,3 million and to R227,4 million. The number of children
benefiting from the school feeding programme is anticipated to increase from
approximately 204 000 learners in 2008 to 335 000 learners in 2009.

There are plans over the two outer years of the MTEF to extend the no-fee
school policy to quintile 3 schools (60 percent of schools) and for fee
exemption of poor learners in quintile 4 and 5 schools. An amount of R165
million for 2010/11 and 2011/12 has been allocated for this purpose and will
form part of the department's existing norms and standards funding allocated to
schools in order to compensate for the loss of income due to the none
collection of school fees.

Given that the Western Cape has relatively fewer schools in national
quintiles 1 and 2 (approximately 14,5 percent of schools in the province), the
WCED has already extended coverage to quintile 3 schools. There are
approximately 346 000 learners representing more than 38 percent of learners
who are exempt from paying school fees.

The expansion of Whole School Evaluation Programme and the tightening up on
exposed weaknesses, principal and teacher development and support will remain a
key objective in our pursuit to improve the quality of education.

Strengthening health services
We are working hard to transform our health services. Although they have
already been substantially strengthened, in this budget further resources are
made available to improve the quality of health care and health outcomes within
the province. We need to address the inequalities that still exist. R9,9
billion has been set-aside in the 2009 Budget for health, representing a
year-on-year increase of 14,5 percent or close to R1,3 billion. In addition to
maintaining current services, increased resources will be channelled towards
reducing infant and child mortality, tuberculosis (TB) and HIV and AIDS.

The budget for health in 2011/12 reaches R11,8 billion. The Comprehensive
Service Plan, based on Health Care 2010, is steadily being implemented to
improve access, quality and sustainability of health services. The ultimate
goal is to treat patients at a level of care most appropriate to their need and
in the communities where they live.

A key deliverable for the department in 2009/10 is the furthering of the
construction of the Khayelitsha and Mitchell's Plain district hospitals, which
are envisaged to be completed in 2012. Over the next four years, it is foreseen
that over R1,2 billion will be spent on the erection of these two hospitals,
bringing much needed respite to our health care services and improving services
immeasurably to these areas.

The Comprehensive HIV and AIDS grant has been increased to R309,9 million in
2009/10 and R448,8 million and R481 million in 2010/11 and 2011/12
respectively.

These increases accommodate greater access and growth in the number of
patients on Antiretroviral Treatment (ART). At the end of December 2008, the
number of patients registered for treatment was 49 383 compared to 37 435 at
the end of 2007/08. The department anticipates that this number will increase
to 68 236 patients registered on ART in 2009/10.

The Burden of Disease study indicated that trauma and violence are the
biggest contributors to the disease burden and account for about 21 percent of
deaths in the province and approximately 40 percent of hospitals admissions.
Therefore strategies to prevent and mitigate the effects of trauma and violence
are urgently needed. A key issue for the Department of Health is to improve
response times of emergency services, including ambulances, towards the
national targets of 15 minutes in urban areas and within 40 minutes in rural
areas. Therefore streamlining Emergency Medical Services (EMS) to improve
response times and prepare for the 2010 FIFA World Cup remains a priority.
Amounts specifically allocated for EMS have increased to R495,6 million in
2009/10, R546,3 million in 2010/11 and R588,5 million in 2011/12.

The department has established a FIFA 2010 Health Unit to co-ordinate all
health planning and preparation to ensure that the province meets the medical
requirements for the tournament. Allocations made in the main budget to Vote 1:
Department of the premier for the rounding-off preparations for 2010 FIFA World
Cup for the first two years of the 2009 MTEF, include amounts to be transferred
to Health for 2010 EMS preparations. This includes contract funding for
ambulance assistants, additional ambulances and medical equipment for Green
Point Stadium and the Public Viewing areas. The benefits of capacitating EMS
for the tournament will leave a legacy of improved emergency services for the
province way beyond the actual event.

Following the Burden of Disease research, which has also informed a number
of interventions aimed at monitoring and reducing the morbidity and mortality
patterns, it has become clear that co-ordinated health research and development
that links the health research agenda to programme management and service
delivery is an extremely important objective. Health research priorities are to
be identified through the establishment of the Provincial Health Research
Committee, and in such a way that they are largely directed towards the
greatest health needs in the province and therefore further improving the
health outcomes in the province.

Protecting and enhancing the focus on youth, women, elderly and the poor.
The national implementation agency, the South African Social Security Agency of
the Department of Social Development, provides grants to 871 063 beneficiaries
in the province amounting to payments of over R5,8 billion to recipients. If
the Western Cape's projections, relative to national trends hold true, we will
spend over R6,1 billion in 2009/10. Over and above this Social Development
receives R1,2 billion in 2009/10, rising by R74,4 million year-on-year to
improve access to social welfare services to vulnerable groups.

Greater awareness of substance abuse, the treatment of abuse and the
provision of secure care centres and places of safety are but some of the many
initiatives undertaken in partnership with communities, all of which are aimed
at protecting our youth at risk, women, elderly and the poor.

The department is expanding the implementation of integrated services for
substance abuse, prevention, treatment and rehabilitation. Programmes to care,
support and protect older persons and assist our senior citizens to stay active
and have access to service centres are being strengthened. All of these gain
further impetus in 2009 and beyond through the community nutrition and
development centres supported by this government. Nutritional meals to the poor
are provided on a regular basis.

Building safer communities
The Department of Community Safety will continue to implement the social
transformation, gang prevention and intervention strategy in 2009/10 to address
the underlying causes of gangsterism, substance abuse, crime and other ills,
which torment our communities. It is important to realise the contribution our
communities can make in enhancing the quality of life in our province. Through
building relationships between law enforcement agencies, non governmental
organisations (NGOs) and government, communities will be better able to address
their specific needs and enhance their safety and well-being.

We have made headway, through the endeavours of the Department of Community
Safety to improve co-operation and trust between communities and South African
Police Service (SAPS) through the establishment of Community Policing Forums
(CPFs). These initiatives facilitate community ownership of crime prevention
and safety.

Speaker, needless to say the MVA Strategy implementation has delivered a
heightened traffic law enforcement presence on Western Cape roads through the
24 hour/7 day week patrol cycle complimented by the 24 hour operation of all 12
provincial traffic centres. The success of the MVA Strategy is already
evidenced in the reduction in road fatalities by 18 percent during the 2008/09
festive season as compared to the previous year.

To continue efforts aimed at reducing road accident fatalities, the
Department of Community Safety has allocated R117.9 million to the Traffic
Safety Promotion Directorate in 2009/10 - approximately 45 percent of the
Department's budget.

Rounding-off preparations for 2010 FIFA World Cup
Overall our contributions to the World Cup, in terms of current calculations
are over R1 billion. These range from physical infrastructure to a variety of
services, especially emergency medical services. As regards infrastructure,
these include contributions to the Philippi training centre, City projects such
as the Green Point Stadium and Hospital Bend, in Somerset West between
Broadlands and Sir Lowry's Roads, the city-airport link along the N2, the
directional ramps at the Koeberg Interchange and Table Bay Boulevard. To round
off our 2010 FIFA World Cup preparations, a detailed scenario-based planning
document and action plan has been crafted and an additional R50 million, spread
over the first two years of the 2009 MTEF, contributes to this developmental
and service delivery legacy. A major recipient is emergency medical services,
who apart from earlier allocations to raise its baseline funding by over R70
million per annum, will over the next two years receive a further boost of R44
million. This is apart from contributions of R40 million to provide an upgraded
emergency care centre at Somerset Hospital in Green Point.

Improving the built environment, including housing and roads
Cohesive, caring and sustainable communities are key to our future. To do that
we need to transform the legacy of apartheid spatial planning patterns. The
costs of transport, the delivery of basic services, access to economic,
cultural and recreational opportunities – all these and more are legacies which
will take decades to eradicate. The provincial government is committed to
achieving proper municipal spatial planning through its interdepartmental built
environment support programme to positively influence the planning and delivery
of integrated human settlements. In practical terms this implies that the
Department of Environmental Affairs and Development Planning has been tasked to
support municipalities to develop credible spatial development frameworks and
human settlement plans. To assist the Department in doing so, R22.3 million
spread over the next three years, has been allocated to them for this
purpose.

For the accelerated development of integrated human settlements, the
Department of Local Government and Housing receives substantial amounts of R1,6
billion in 2009/10, R1,9 billion in 2010/11 and R2,1 billion in 2011/12 to
amongst others deliver, in 2009/10, 19 000 housing units, 18 000 service sites
and the transfer of houses to over 2000 households through the enhanced
extended discount benefit scheme.

Speaker, let me deal with the recent findings of the City's multiparty
disciplinary committee that was set-up to investigate the conduct of Democratic
Alliance councillor Frank Martin around the land invasions in Delft, about a
year ago. The committee found Martin guilty. It ruled that he was not acting at
all times in the best interests of the municipality and in such a way that the
credibility and integrity of the municipality has been compromised. It found
further that he encouraged people within his ward to invade homes at Delft. His
actions resulted in almost 130 families, which include 200 children, living on
a pavement for more than a year.

The cost of the invasion directly attributable to his conduct, has
reportedly cost more than R100 million, which includes repairs to more than 1
600 partly built houses, legal fees, security costs and the cost of relocating
the people involved to another area of Delft. For this, the disciplinary
committee recommended that Martin only be suspended, without pay, for a month.
This is cynical, horrendously inappropriate and amounts to nothing more than a
slap on the wrist.

It would be irresponsible financial management to allow this wastage without
attempting to recover it. The provincial government is seeking legal advice as
to whether the province and the National Department can collectively recover
the cost incurred by Government from Councillor Martin, the Democratic Alliance
and the City of Cape Town. The taxpayer cannot be expected to foot the bill for
improper conduct.

On behalf of this provincial government I wish to place on record for the
people of Delft and the province as a whole - we are committed to the difficult
and costly process of providing a roof over every family's head without regard
to the colour of your skin, your religion or your language. We will do
everything in our power to ensure that the processes that are followed are fair
and transparent. But we will never stand back and say nothing when illegal
housing invasions are used as a pretext for racial mobilisation and sowing of
race hatred in our communities.

Securing our roads for economic growth
An amount of R1,627 billion has been earmarked for the planning, construction,
upgrading and maintenance of the Provincial road network in 2009/10 because of
its critical importance to the economy. As mentioned earlier, our roads are of
the best in South Africa. These earmarked funds intend to keep it that way.

Extending agrarian reform and rural development and sustainability of food
security. The budget for the Department of Agriculture increases to R399
million in 2009/10, rising significantly to R515,5 million in 2011/12. Food
security is a key priority. No one should go hungry. Food security projects
aimed at growing our own food make us less dependent on food imports and
provide a security blanket for the poor. These projects will be rolled out in
each district with priority given to women, youth, disabled persons and those
living with HIV/AIDS. In addition, existing food gardens are to be revitalised
and advisory services strengthened.

Strengthening financial prudence, corporate governance and inter
governmental relations (IGR)
This government has already demonstrated its commitment to inter-governmental
relations, despite intemperate and ill-considered attempts to undermine these
efforts including the withdrawal of funding from CTRU. A focus on
intergovernmental relations (IGR) has the real and achievable potential to
improve service delivery through strategic partnerships, co-operation and
agreements with other spheres of government as well as social partners. Much
work in this respect has been performed under the auspices of the LGMTEC and
PAFTECH processes run respectively by the Provincial Treasury and Local
Government, with promising results.

Interactions between the province and municipalities during the recent LG
MTEC 1 engagements and the province-City Indaba have established mechanisms to
improve the alignment of municipal and provincial planning, budgeting and
delivery processes. This must improve planned capital projects, the spatial
location of projects, the optimal use of allocated resources, ensure that
services are not duplicated and secure the cost efficiency of concurrent
functions such as transport.

"Going it alone" strategies in any sector of public service provision makes
no sense at all.

The effects of the impending recession on government revenue and expenditure
are going to be severe. This presents an enormous challenge. But is also an
opportunity to do everything possible to strengthen financial prudence,
management and corporate governance. This requires significant focus, tireless
attention and new mechanisms with which departments concentrate more clearly on
provincial and national deliverables and ensure more efficient and effective
targeting of frontline services.

Securing efficiency gains in all departments has become an ever important
exercise. There has to be a renewed emphasis on departments tabling credible
budgets, which should include a revision of non-core spending items,
underpinned by the broader goal to improve relative efficiency and value for
money. Speaker, this Government is driven by a strong conviction and action to
cut all wastage, the curtailment of expenditures on bells and whistles, the
tightening of management of frontline services and the prevention of slippage
that derails delivery. This should include the phasing out of ineffective
programmes.

During the 2009 Budget process departments were required to identify
discretionary expenditure items particularly located in the goods and services
category and included items such as consultants, marketing, promotional items,
travel and nonessential expenditure, and curtailing non-performing departmental
programmes. The 2009 budget reflects savings measures amounting to R426.2
million over the MTEF across all departments, who were exhorted to reprioritise
to more productive activities that facilitate the delivery of frontline
services.

We are not out of the woods as yet and much more needs to be done in this
regard.

Therefore the Provincial Treasury, over the next financial year, will work
closely with the Department of the premier to identify areas, where further
inefficiencies may exist for decisive intervention and correction. The related
focus on corporate governance is equally important. Interventions to support
management in some departments to ensure informed managerial decision making,
effective monitoring and evaluation, appropriate compliance and adherence to
relevant norms and standards must be strengthened.

Speaker the Provincial Legislature has a special role to play in this
regard. Over the last five years the Legislature has played a critical role in
bringing to attention critical weaknesses in some departments and wasteful
expenditure and a migration away from core mandates in others. Oversight has
contributed to exposing duplication of functions and inefficiencies. This work
is not easy for MPLs because they have to ask hard questions without all the
information at hand. It requires research, reading and plain old fashioned hard
work. But it is absolutely essential. I wish to thank all the MPLs who have
done this work diligently and urge that much more needs to be done.

National Treasury has named 185 municipalities in eight provinces for
failing to follow all the financial reporting laws. Speaker, what is
encouraging to note is that the Western Cape was the only Province without any
municipalities named for financial irregularities or failing to follow
financial reporting laws, such as failure to sign off on monthly reports, or to
sign returns on conditional grant spending or to publish the required monthly
financial information.

Since the enactment of the Municipal Finance Management Act in July 2004,
the Provincial Treasury and Local Government and Housing together with the
other provincial departments and all municipalities have worked hard at
improving the provincial and local government interface. The improvement in
intergovernmental relations between provincial departments and municipalities
has yielded outstanding benefits and results.

There has been a steady improvement in financial management in
municipalities, which saw the number of unqualified opinions rising from 11 in
2006/07 to 23 in 2007/08, a more than 100 percent improvement.

Greater collaboration and further efficiency improvements
The need to leverage efficiency gains from all departments, the need for
departmental collaboration and joint work has become a key success factor.

Achieving collective and or common goals, negotiation around funding
allocations and collaborative priority setting and trade-offs are key elements
of the provincial budget process. In this regard the role of the provincial
cluster system is important as a mechanism to ensure coherent strategic
direction and implementation. Provincial clusters have already started to
engage on greater collaboration and focus on opportunities for greater
efficiency amongst them. The identified areas require further refinement over
the next year and include training and skills development, food security, early
childhood development and drug and substance abuse.

The duplication of research, services and programmes across departments and
sectors makes no sense at all. We will continue to do everything possible to
resist the temptation of going it alone strategies.

Conclusion
Budgets of course, have to be pragmatic and practical to work. But all the
numbers in the budget must actually speak to the people of this province,
especially those working families in our society who struggle under the
crushing burden of poverty and unemployment. This budget I hope will be seen
for what it is; a plan to further strengthen service delivery in health,
education, job creation, social development and rural development and which
puts the people of the province first. This government has proved over the last
five years, and notwithstanding the problems it faced, that we are on track to
deliver good governance, decent services and economic opportunities and reduce
the gap between rich and poor. Because it is an undisputable fact – together we
can do more.

Speaker, allow me to thank: the premier for her leadership and my fellow
MECs for their invaluable support and guidance throughout this budget
process.

Secondly, I wish to thank the Heads of Departments and Chief Financial
Officers of all departments for their co-operation and hard work. There are
many challenges that have to be overcome in the public service. But I have
every confidence in the truth of the statement that the public service of The
provincial government of the Western Cape is composed of excellent women and
men, at every level of service who carry out their work with dedication and
hard work. To these people we all owe a debt of gratitude.

I must give special thanks to the Provincial Treasury, Dr JC Stegmann and
the senior management and staff. Over the last few months I have benefited from
their constant support and gained a proper perspective of how hard they work
and how their work in support of all departments is invaluable, not just in
preparing budgets but ensuring that all departments function optimally.

I wish to thank Mr Kobus Brynard, the Chair of the Standing Committee of
Finance and Economic Development and Mr Richard Dyantyi the Chair of the Budget
Committee for their support and apologise to them if the pressures of work have
meant that I have not been able to give them more of my time.

I wish to thank the leadership of my political party the African National
Congress for the support and guidance that has been afforded to me.

Finally I must thank the women and men who staff my office for the very long
hours and their ability to put up with a grumpy middle aged man.

Speaker, it gives me great pleasure to table the 2009 Budget Overview,
Estimates of Provincial Expenditure, Budget Summary, Western Cape Appropriation
Bill, Local Government Allocations and accompanying Provincial Gazette, and
this Speech, for discussion and consideration by this House.

Thank you.

Garth Strachan

Issued by: Western Cape Provincial Government
24 February 2009